A Tesla in Every Driveway

NEW YORK ( TheStreet) -- Hockey great Wayne Gretzky taught us that in order to win, you have to skate to where the puck is going, not to where it is now. So what does that say about Tesla (TSLA) ?

To find out, I had to go to Ground Zero for Tesla. Where is that? In Silicon Valley, of course. I spent the weekend driving
around the neighborhoods of Menlo Park, Atherton, Woodside and
similar ZIP codes.

What I found was astonishing. There was, on average, a Tesla on
almost every block. Some blocks had several. One block had eight
houses, and I saw five Teslas in the driveways on that block.

Five out of eight! That's 62%. Seeing as Tesla started delivering
Model S cars in June 2012, and production didn't ramp meaningfully
until October, this pretty much means that every single new premium
car sold in this area in the past six months or so was a Tesla. A 100%
market share of new cars sold, most likely.

Does this mean Tesla's market opportunity is now limited, because it
has already peaked at 62% cumulative market share on some blocks? Not
at all.

These are relatively expensive homes in an expensive neighborhood.
Silicon Valley does not come cheap these days. Good homes cost $2
million to $3 million -- or much more. Each home had what I estimated
to be at least three cars.

Three cars per home, multiplied by eight homes on the block, is 24
cars. With five Teslas, that's barely 20% cumulative market share out
of the 24 cars. That's like the smartphone market in 2004 -- most of
the growth was yet to come, as exemplified by Apple's (AAPL) and Google's (GOOG) stock-price explosions since then.

Speaking of Apple, ask yourself: What was Apple's market share six
months into the iPhone's launch in 2007? What was it exiting 2007?
Did it break 1%? What was Google's Android market share in 2008?
Basically, 1%.

I stopped at the parking lots outside a couple of coffee shops, Whole
Foods (WFM) and a prominent gym, where the number of plug-in
cars was significant. Each place's parking lot had at least a couple
of Chevrolet Volts, Nissan (NSANY) LEAFs and of course a couple of Tesla Model S cars.

I asked a handful of people leaving and departing in these cars why
they bought one. They responded mainly by a combination of the
following: "I was on my third Mercedes S500 since 1993, and I was
bored. I wanted something different, something exciting, some new
technology."

Alternatively, I heard "Tesla is a local California company. The
factory and headquarters are right here. If I ever have a problem, I
don't have to deal with a dealer -- I go straight to the source."

The local theme mimics what appeared to be the reason some of
these people were in the Whole Foods parking lot to begin with. Some
of the food at Whole Foods may or may not be grown locally -- I
neither know nor care -- but it's clear that it is the perception that
matters. The image. Misguided or not, people believe locally made is
better.